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CBO - Cobram Estate Olives

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Cobram Estate Olives is Australia’s largest producer and marketer of premium quality extra virgin olive oil. With operations in Australia and the USA, export customers in 17 countries, and a portfolio of premium brands, the Company is a market leader in the Australian extra virgin olive oil industry and a leader in sustainable olive farming.

The Company owns the two top-selling Australian extra virgin olive oil brands, Cobram Estate® and Red Island®, with combined Australian supermarket sales of $135.4 million in 2020. The Company’s brand strength extends from its position as Australia's largest vertically integrated olive oil producer. The Company owns over 2.4 million olive trees planted on 6,584 hectares of farmland in central and north-west Victoria, with the Company's 2021 harvest projected to account for 71% of Australia’s total olive oil crop. Cobram Estate Olives is also the owner of Australia's largest olive tree nursery, two olive mills, an olive oil bottling, storage, and laboratory facility, and is a leading player in olive industry research and development.

In California, USA, the Company has established an olive mill, storage and bottling facility, laboratory, and administration offices, and has 305 hectares of owned and leased groves, olive supply contracts with over 20 Californian olive growers. The Cobram Estate® brand was the 10th highest selling olive oil by value in USA grocery and specialty channels for the 12-months to April 2021.

It is anticipated that CBO will list on the ASX during August 2021.

 
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Cobram Estate Olives is Australia’s largest producer and marketer of premium quality extra virgin olive oil. With operations in Australia and the USA, export customers in 17 countries, and a portfolio of premium brands, the Company is a market leader in the Australian extra virgin olive oil industry and a leader in sustainable olive farming.

The Company owns the two top-selling Australian extra virgin olive oil brands, Cobram Estate® and Red Island®, with combined Australian supermarket sales of $135.4 million in 2020. The Company’s brand strength extends from its position as Australia's largest vertically integrated olive oil producer. The Company owns over 2.4 million olive trees planted on 6,584 hectares of farmland in central and north-west Victoria, with the Company's 2021 harvest projected to account for 71% of Australia’s total olive oil crop. Cobram Estate Olives is also the owner of Australia's largest olive tree nursery, two olive mills, an olive oil bottling, storage, and laboratory facility, and is a leading player in olive industry research and development.

In California, USA, the Company has established an olive mill, storage and bottling facility, laboratory, and administration offices, and has 305 hectares of owned and leased groves, olive supply contracts with over 20 Californian olive growers. The Cobram Estate® brand was the 10th highest selling olive oil by value in USA grocery and specialty channels for the 12-months to April 2021.

It is anticipated that CBO will list on the ASX during August 2021.


Thanks for the info. Contrary to my current plan (decided IPOs too hard), will watch this one. Into olive oil. Maybe emotions entering the picture (LOL).
 

Dona Ferentes

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Being the designated shopper, in the Olive Oil section there are the big name Spanish and Italian lines, owned by the multinationals, which are often discounted by 50%, each brand usually only for a week and seem to take it in turns. They all have the Extra Virgin and Smooth and Lite versions, a bit of product differentiation.

Cobham is priced at a premium, now at $18 a Litre bottle. For a while it played the 50% discount route but that stopped, probably a year ago. The price was held at top dollar for months; when word of the IPO appeared, then Cobham discounted, only to $14 but held it for more than a month. Now the discount has disappeared. I presume that effort was to 'pad' the sales for the prospectus.

It's a good product.
 

Sean K

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I only buy Cobram because it's Australian, but I'm not sure why they're listing. It's olive oil. We use a couple of table spoons of it a day, maybe. Where's the upside growth here? Growth in USA for sure but they grow plenty of trees there too. Are, they going to start buying out the Italian and Spanish trees and producers? What's next, a macadamia IPO? Hmm, I'd buy that! 😋
 

So_Cynical

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Good products in a very competitive and crowed market, low margins too one would think, a price taker not setter.
I like olive oil and always buy Australian, usually red island or Cobram when on special, one plus would be that this
stock would be attractive to the ethical funds.
 

Dona Ferentes

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I only buy Cobram because it's Australian, but I'm not sure why they're listing.
Set up by two guys in 1998. Now employs 130 people in Aust and USA. Succession planning? Take some money off the table? Pathway for external CEO and other management to be incentivised?
It's olive oil. ... Growth in USA for sure but they grow plenty of trees there too.

Organoleptic characteristics !!
Medium-density groves work for every type of olive variety and allow the company to tailor each site to the variety that is best suited for it based on soil quality, topography and other factors. The vast majority of non-traditional groves in California are either high-density or super-high-density plantings of Arbequina, Arbosana and Koroneiki. ... The wider variety of olives conducive to medium-density groves will allow [Cobham] to produce olive oils with a broader range of organoleptic characteristics.

I guess the super high density plantings are the battery hens of the olive oil world. The above strategy would allow for brand differentiation, and different taste, price and quality entry points. (get the Gold and 5*Star Awards on the Premium label, and sell the reputation on)
 
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didn't we try a Macadamia one several years back

i remember Buderim Ginger

and i hold RFF

i did very well when i held SHV

made profit but lost last bit ( of profit still running ) on the sandalwood one ( turned into QIN before it disappearing )

i would have to sit and watch on olives ( dodged CGC and could never get my target on VTH )

the company might be awesome , but i am veering towards super-cautious near term
 

Sean K

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Set up by two guys in 1998. Now employs 130 people in Aust and USA. Succession planning? Take some money off the table? Pathway for external CEO and other management to be incentivised?
Probably just cashing in. Will be interesting to see their PE on listing. I'll take a stab at 3.
 
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I only buy Cobram because it is one I trust. Olive oil fraud is rampant. As more people become aware I think that trustworthy quality brands will increase their market share.
 

Dona Ferentes

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After failing to score institutional support for a listing priced at $2 per share, Cobram Estate is pushing ahead with a compliance listing this month. The company has locked in August 11 as its date to start trading.

The company had planned to primarily pursue retail investors for a $175 million raising through its IPO, but still needed some institutional support and it became clear to the brokers (Bell Potter, Ord Minnett and Morgans) that the deal wouldn’t get done at $2 per share.

Not needing to raise capital and having already had an independent valuation of the business completed, the Cobram team (who have run the business for 23 years) opted to undertake a compliance listing instead. The business is understood to have wanted to provide liquidity for its 784 shareholders, but when it comes to price it’s happy to let the market work it out post-listing.

Sources suggested it had been subject to numerous takeover offers in the past, but management had no desire to sell out.
 

Dona Ferentes

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shares listed and trading today, after the pro forma Prospectus

Opened at 11am, at $1.87 and settling in low 1.80s.
 

Dona Ferentes

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After failing to score institutional support for a listing priced at $2 per share, Cobram Estate is pushing ahead with a compliance listing this month. The company has locked in August 11 as its date to start trading.
and guess what... starting out trading around $1.80, CBO has been as high as $2.05 on Day Three and holding above $2.

Maybe the article could have read, "after failing to get institutional support ensuring a stag for the entitlement brigade," CBO stuck to its guns and refused to give it away for $1.80. Will be able to raise capital on their terms down the track, I'd assume.
 
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and guess what... starting out trading around $1.80, CBO has been as high as $2.05 on Day Three and holding above $2.

Maybe the article could have read, "after failing to get institutional support ensuring a stag for the entitlement brigade," CBO stuck to its guns and refused to give it away for $1.80. Will be able to raise capital on their terms down the track, I'd assume.
I am so confused $2.10??? $800 million market cap trades at 5 x revenue and seems to lose money.

Take out adjusting value of biological assets and they lost money in 2019 and lost money in 2020 and again at the half. Net assets are $136 million. Operating cash-flow couldn't cover capital costs in 2019 or 2020 and it looks like the company was pretty well out of cash by December 2020. Debt is too high at $157 million and I question the true value of the plant and equipment sitting at nearly $300 million. I though SHV was over valued - but cobham is in a whole new world. With this degree of market lunacy I have hope my SGL should get to about $30/share and HPP to $2.50. Guess rice and macadamias are not as exciting as oil and almonds.

I'm not even going to bother to work out any ratios, I cannot understand any reason to buy these shares unless they have a very good plan to roll up every other small olive producer in Australia. At least with the AUD$ going poorly their exports should do ok.
 
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In the short term, in an uptrend and has formed a double bottom and could push higher...

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Picked for the ASF stock tipping competition.
 
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Forgot about this one! $1.61 starting to look a little better than $2.10

Isn't this what the government is trying to stamp out? Cobram was only able to pay a dividend because they raised capital earlier in the year and borrowed. Operating cashflows (+$27m) were not enough to cover capital expenditure (-$37m) and the recorded a loss this year. Still positive operating cashflows are better than negative ones. 1/2 yearly will be telling as the cash balances are so low that something has to turn around. Still not worth the risk for me.

I don't like agricultural shares because of the constant revaluation of biological assets as well as the cyclical nature of harvests. Every few years I dip my toes, but I don't often hold very long. I'm still trying to wrap my head around the $80 million increase in land and building valuation. Also don't understand how $80 million appeared out of thin air. But I don't understand Sydney housing either.
 
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Forgot about this one! $1.61 starting to look a little better than $2.10

Isn't this what the government is trying to stamp out? Cobram was only able to pay a dividend because they raised capital earlier in the year and borrowed. Operating cashflows (+$27m) were not enough to cover capital expenditure (-$37m) and the recorded a loss this year. Still positive operating cashflows are better than negative ones. 1/2 yearly will be telling as the cash balances are so low that something has to turn around. Still not worth the risk for me.

I don't like agricultural shares because of the constant revaluation of biological assets as well as the cyclical nature of harvests. Every few years I dip my toes, but I don't often hold very long. I'm still trying to wrap my head around the $80 million increase in land and building valuation. Also don't understand how $80 million appeared out of thin air. But I don't understand Sydney housing either.
that is the reason i normally avoid agricultural assets along with quirks of natural

but had a VERY nice run with SHV , a good run for TFS/QIN got a couple of fingers singed at the end ( the red flags were raised but i forgot to sell the last few , silly me ) , RFF is going nicely , D20 is travelling OK , and SGL(LV ) is a recent buy so too early to tell ( but up currently )

BUT i look now and then at olive stocks and NAM , maybe one day
 
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Could you please further clarify:
while i can't get inside member Triangle's head .

there did seems to be a government 'initiative ' to stop companies who do a recent capital raising to pay dividend ( that half or full year )

now in some cases it has a bad look , raising cash to pay a director ( and substantial shareholder ) a nice dividend for what might be a mediocre year

in other cases the company declares a dividend , but later sees a compelling business growth opportunity ( and needs some capital input )

now i am guessing the government is just seeing potential tax revenue slipping from it's clutches ( and it is desperately trying to flip over rocks looking for dropped coins ) and being in a coalition has to be careful who it upsets in case the coalition partner aligns with a different group

i haven't been following CBO close enough to know if the events for likely to prove the government's case or not

but those governments LOVE new sources of revenue ( and to write more laws so it looks like they are doing something )
 
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while i can't get inside member Triangle's head .

there did seems to be a government 'initiative ' to stop companies who do a recent capital raising to pay dividend ( that half or full year )

now in some cases it has a bad look , raising cash to pay a director ( and substantial shareholder ) a nice dividend for what might be a mediocre year

in other cases the company declares a dividend , but later sees a compelling business growth opportunity ( and needs some capital input )

now i am guessing the government is just seeing potential tax revenue slipping from it's clutches ( and it is desperately trying to flip over rocks looking for dropped coins ) and being in a coalition has to be careful who it upsets in case the coalition partner aligns with a different group

i haven't been following CBO close enough to know if the events for likely to prove the government's case or not

but those governments LOVE new sources of revenue ( and to write more laws so it looks like they are doing something )
I wasn't aware of their hand in everything, but thanks for the explanation.

In theory sounds like a good idea, but could lead to too much regulation, I think.
 
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